Finance & Accounting

What Is Form ADT-1 MCA And How To File It?

calendar20 Apr, 2023
timeReading Time: 5 Minutes
What Is Form ADT-1 MCA And How To File It?

Any business that wishes to operate legally needs to perform regular audits. Auditors assist in ensuring that business activities adhere to relevant rules and regulations, spot possible dangers, and suggest remedial measures where necessary. Also, auditors can offer insightful information on a business’s operation and future prospects. The business legislation in India requires a corporate auditor to examine the organisation’s financial reports. The auditor’s responsibility is to spot any abnormalities and provide remedies. The auditor also has other duties, including monitoring management’s performance, giving guidance on accounting principles and practises, and doing other tasks as the board of directors or management needs. According to Section 139 (1) of the revised Companies Act of 2013, when a business appoints an auditor, it is required to notify the registrar of companies (ROC) of the employment of the auditor in a specified manner. For this, the ADT-1 MCA form is utilized. A company must inform the auditor of its appointment per Section 139 (1) of the Companies Act of 2013 and file a notice of this appointment with the registrar of companies within fifteen (15) days after the appointment. According to the regulations, this notice of the auditor appointment must be completed in Form ADT-1 on the MCA portal[1].

Laws Regarding the Form ADT-1 MCA

Following are the various laws regarding the Form ADT-1:

  • Section 139 Companies Act of 2013

According to sub-section (1) of Section 139 of the Act says that the first auditor of a non-government company shall be appointed by the Board of Directors (BOD) within thirty (30) days of the date the company was registered. But in a case where Board fails to appoint such an auditor, it shall notify the members of the company, who shall appoint an auditor within a period of ninety days at an extraordinary General Meeting (GM), and the auditor is required to hold the office until the conclusion of the first annual report. In simple terms, the first auditor must be appointed by the board of directors within a period of 30 days of the company’s incorporation; no file or notification is necessary for this appointment. The auditor can be appointed for a term of 5 years at the conclusion of the first annual general meeting.

  • Rule 3 Companies (Audit and Auditors) Rules of 2014

The section discusses the process for selecting auditors. The following options exist for choosing the auditor:

  • The Board of Directors (BOD) of the Company shall assess the qualification of the auditor to satisfy itself where a company is obliged to establish an audit committee pursuant to Section 177 and where a company is not required to establish an audit committee.
  • As appropriate, any pertinent information may be requested from the auditors by the audit committee or the Board.
  • The board will evaluate and recommend the auditors’ names to the members at the AGM for appointment based on the Audit Committee’s recommendation to the board.
  • Section 139(6) Companies Act of 2013

The first auditor’s appointment is discussed in this section. The first auditor of a company (other than a government corporation) shall be appointed by the BOD within 30 days of the date of incorporation of the company. If the Board fails to make the appointment, it shall notify the members, who shall make the appointment within 90 days at an extraordinary general meeting. The auditor shall serve until the end of the first annual general meeting.

When Should You File Form ADT-1 MCA?

For this section the author has covered the following two scenarios:

  • First Scenario: In the case of a new company incorporate.

The company’s first board meeting, which must take place within 30 days after incorporation and at which the board of directors chooses the auditor, must be convened within 15 days following the filing of Form ADT-1.

  • Second Scenario: In the case where companies have already been incorporated.

Within 15 days of the AGM at which the Auditor was appointed or reappointed, as applicable, the company must file Form ADT-1 with the registrar of companies. For instance, the corporation must submit Form ADT-1 by October 14 if the AGM was held on September 30, 2023.

What Are The Documents To Be Attached To The Form?

You will need the following paperwork to submit Form ADT-1 MCA:

  • A copy of the Board Resolution for the Company
  • A written authorization from the auditor
  • A certificate from the auditor attesting under Section 141 about their legitimacy
  • A copy of the notification that the company provided to the auditor.

What Is The Process Of E-Filing Of Form ADT-1 MCA?

Below, the author outlined every procedure you need to follow when completing Form ADT-1 MCA online:

  • ADT 1 can be electronically filed. On the website of the Ministry of Corporate Affairs (MCA), the form can be downloaded;
  • E-form approval is automatic;
  • Once the relevant authority has registered the E-form, an acknowledgement email is sent to the provided email ID.

Penalty on Delayed Filing of Form ADT-1 MCA

If there is a delay, the following fines will apply:

S. No. Delay in filling  (in terms of days) Penalty Applicable
1 Upto 30 days Twice the normal fees
2 Between thirty (30) and sixty (60) days Four times the normal fees
3 From sixty (60) to ninety (90) days Six times the normal fees
4 Between ninety (90) and 180 days Ten times the normal fees
5 Exceeds 180 days Twelve times the normal fees

What Are The Additional Points To Keep In Mind While Filling?

Here are some extra considerations to make when completing the Form ADT-1 MCA:

  • Form ADT-1 must be filed by any and all Private, Listed, Unlisted, Public, One Person, and Other Companies;
  • The auditor is not responsible for filing the paperwork; the company itself must do it;
  • Form ADT-1 must be submitted even if the auditor is appointed on a temporary basis;
  • If deemed required, the document may also be submitted for the appointment of the company’s first auditor;
  • On the website of the Ministry of Corporate Affairs, Form ADT-1 may be electronically filed;
  • This method will automatically approve the electronic form;
  • The authorities will email the company’s registered email address with an acknowledgement if the form is successfully registered;
  • The previous Form 23B, which the auditor was required to file upon obtaining the appointment letter from a corporation, has been replaced by Form ADT-1. At the very least 30 days after receiving the appointment letter, Form 23B had to be submitted.However, this approach was abandoned, and a new Form ADT-1 was issued with the introduction of the New Companies Act 2013;
  • Besides that, the SRN number from the ADT-1 form must be mentioned when the organisation files its AOC-4.

Conclusion

The process of auditing involves looking at financial statements and other pertinent data to see if they accurately reflect the financial situation of a firm as of a specific date and the fair market value of its assets and liabilities at that time. In order to make sure that businesses are in compliance with Indian legislation, auditors are crucial. It was determined that Form ADT-1 MCA is used when a business appoints an auditor and is not required to notify the Registrar of Companies of the appointment, as required by Section 139(1) of the 2013 New Companies Act. Each year, following the Annual General Meeting at which the new auditor was chosen, a notice of appointment of auditor is filed with the Registrar of Companies. Within fifteen (15) days of the meeting after the appointment of the auditor, Form ADT-1 MCA must be submitted to the Registrar of Companies.

Read Our Article: Is It Mandatory To File ADT 1 For Auditor’s Appointment?

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